The Wall Street Journal reports that Saudi Arabia is in active talks with China to price some of its oil sales to China in yuan instead of the dollar, in what would be a “profound shift” for Saudi Arabia to price even some of its roughly 6.2 million barrels of day of crude exports in anything other than dollars. Talks between Saudi Arabia and China have been ongoing for six years, according to the report, but have heated up in recent months.
But some analysts and currency experts doubt the sincerity of the effort, and instead see a “political message to the U.S.” as relations between the Kingdom and the United States cool over security and other concerns.
“I don’t know if it is really real,” said Guillaume Tresca, a senior emerging-market strategist at Generali in Paris in comments to Bloomberg. “It happens at a moment when the geopolitical order is moving. The Saudis are trying to play with what they can. It is just a signal sent to the U.S. they want more consideration.”
The dollar has long been the default currency for pricing energy contracts around the world. The majority of global oil sales—around 80%—are done in dollars.
“Throughout the last few years, there have been many failed attempts to call the demise of the dollar,” Witold Bahrke, a Copenhagen-based senior macro strategist at Nordea, also told Bloomberg. “We think this is just another of such failed attempts.”
